Speculators have come a long way from last month's all-time record bearishness in Chicago-traded grains and oilseeds as they covered a sizable amount of short positions for the second week in a row. In the week ended Feb. 6, money managers expunged 100,152 contracts from their combined net short position in CBOT futures and options, according to data from the US Commodity Futures Trading Commission.
Adding this to the previous week's slash of 237,265 contracts, and speculators are perhaps refreshingly no longer the "most bearish-ever for the time of year" in the CBOT futures and options arena, leaving that title with 2016.
However, the reduction in negativity toward CBOT prices may not have lasted through the end of last week. Among the suppressive fundamental factors was an update from the US Department of Agriculture that placed year-end US soyabean inventory at an 11-year high.
But South American weather has been primarily in the driver's seat as of late. The US agency, along with analysts in Argentina, cut that country's corn and soyabean output potential late last week due to the ongoing drought conditions in the key exporter.
At this time of year, the market's take on Argentina's crop potential can swing violently between weather model runs. Forecasts were fairly dry early in the week, but rains moved in by Friday and outlooks showed the possibility for more in the near future. Broad declines in commodities and a strengthening in the dollar did not encourage a bullish mood late last week. The 19-market Thomson Reuters CoreCommodity Index fell 1.7 percent on Friday to the lowest levels in seven weeks.
Trade sources suggest that over the past three sessions, commodity funds were net buyers of corn, net sellers of soyabeans, straight buyers of soyabean meal, and straight sellers of soyabean oil.
Through Feb. 6, money managers reduced their net short in CBOT corn futures and options to 82,924 contracts from 130,942 in the week prior, representing their least bearish view on the yellow grain since the end of August. Speculators sold CBOT soyabeans for the first four days of the period as front-month futures slid a total of 3 percent. But renewed fears over the Argentine drought on Tuesday completely outweighed earlier selling and funds ultimately pared their net short in the week ended Feb. 6 to 9,978 futures and options contracts from 21,849 in the prior week.
Although they head into this week with a much more bullish meal outlook, funds slightly trimmed their net long through Feb. 6 in soyabean meal futures and options to 52,003 contracts from 55,235 in the week before.
Money managers covered short positions in CBOT soyabean oil, cutting bearish views to 2,688 futures and options contracts from 16,588 in the prior week. Worsening drought in the Southern US Plains flipped speculators' overall sentiment toward K.C. wheat last week. Through Feb. 6, money managers switched to a net long position of 15,157 futures and options contracts from the net short of 1,897 contracts a week earlier.
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